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EPAM Reports Results for Fourth Quarter and Full Year 2015

Press Release:
FEBRUARY 17, 2016

Fourth Quarter revenue increased 28.7% year-over-year and 10.3% sequentially Annual revenues of $914.1 million, up 25.2% year-over-year Non-GAAP net income grew more than 31.3% for the fourth quarter year-over-year and 28.2% for the full year

Newtown, PA - February 17, 2016 -- EPAM Systems, Inc. (NYSE:EPAM), a leading global provider of product development and software engineering solutions, today announced results for its fourth quarter and year ended December 31, 2015.

“We are very pleased that, despite market uncertainties and FX challenges, our investments in new digital capabilities, along with our ability to successfully integrate them with our traditionally strong software engineering skills, allowed us to reach our 16th consecutive quarter of over 20% year-over-year organic revenue growth,” said Arkadiy Dobkin, CEO and President of EPAM. “As we look to 2016, our continued investments should position us better to benefit from higher-growth market opportunities around the world.”

Fourth Quarter 2015 Highlights

Revenues increased to a record $260.3 million, up 28.7% year-over-year, and 10.3% sequentially;

In constant currency, revenue was up 34.3% year over year and 11.7% sequentially;

GAAP income from operations was $31.8 million, an increase of 32.3% compared to $24.0 million in the fourth quarter of 2014;

Non-GAAP income from operations was $46.9 million, an increase of $10.7 million, or 29.6%, from $36.2 million in the fourth quarter of 2014;

Quarterly diluted earnings per share (EPS) on a GAAP basis was $0.52, increase from $0.37 in the in the fourth quarter of 2014;

Non-GAAP quarterly diluted EPS was $0.78 up 25.8% from $0.62 in the fourth quarter of 2014.

Full Year 2015 Highlights

Revenues increased 25.2% to a record $914.1 million, up from $730.0 million in 2014;

In constant currency, revenue was up 32.8% year over year;

GAAP income from operations for 2015 was $106.0 million, an increase of 23.0% over 2014;

Non-GAAP income from operations was $158.7 million, an increase of 28.9% compared to $123.1 million in 2014;

Diluted EPS on a GAAP basis was $1.62, compared to $1.40 in the previous year;

Non-GAAP diluted EPS was $2.73, compared to $2.22 in 2014.

Cash Flow from Operations

Cash from operations was $76.4 million for the year 2015, down 27.2% from $104.9 million in 2014, and was $11.8 million in the fourth quarter of 2015, down from $48.7 million in the fourth quarter of 2014;

As of December 31, 2015, cash and cash equivalents totaled $199.4 million.

Other Metrics

As of December 31, 2015, total headcount was 18,354, an increase of 30.1% from 14,109 at December 31, 2014;

Total production headcount increased 36.0% to 16,078 in 2015 from 11,824 in 2014;

Non-GAAP net income growth for 2016 is expected to be at least 20% year-over-year, with an effective tax rate of approximately 21%;

The full year weighted average share count is expected to be just approximately 53.6 million diluted shares outstanding and the full year non-GAAP diluted EPS will be at least $3.20;

The full year GAAP diluted EPS will be at least $2.05;

Revenues at least $258 million for the first quarter of 2016, representing a growth rate of at least 29% over first quarter 2015 revenues. This includes 3% anticipated currency headwinds, meaning constant currency growth of at least 31%;

First quarter 2016 non-GAAP diluted EPS is expected to be at least $0.70 based on an estimated first quarter 2016 weighted average of 53.0 million diluted shares;

First quarter 2016 GAAP diluted EPS to be at least $0.43.

Conference Call Information

EPAM will host a conference call to discuss results on Thursday, February 18, 2016 at 8:00 a.m. Eastern Time. The live conference call can be accessed by dialing 1-877-407-0784 (domestic) or 1-201-689-8560 (international). A telephonic replay will also be available approximately one hour after the call and can be accessed by dialing 1-877-870-5176 (domestic) or 1-858-384-5517 (international). The passcode for the replay is 13629306. The telephonic replay will be available until March 3, 2016. Interested investors and other parties may also listen to a webcast of the conference call by logging onto the Investor Relations section of the Company’s website at http://investors.epam.com.

About EPAM Systems

Established in 1993, EPAM Systems, Inc. (NYSE: EPAM) is recognized as a leader in software product development by independent research agencies. Headquartered in the United States, EPAM serves clients worldwide utilizing its award-winning global delivery platform and its locations in over 26 countries across North America, Europe, Asia and Australia. EPAM was ranked #6 in 2013 America's 25 Fastest-Growing Tech Companies and #3 in 2014 America's Best Small Companies lists by Forbes Magazine.

EPAM supplements results reported in accordance with United States generally accepted accounting principles, referred to as GAAP, with non-GAAP financial measures. Management believes these measures help illustrate underlying trends in EPAM's business and uses the measures to establish budgets and operational goals, communicated internally and externally, for managing EPAM's business and evaluating its performance. Management also believes these measures help investors compare EPAM's operating performance with its results in prior periods. EPAM anticipates that it will continue to report both GAAP and certain non-GAAP financial measures in its financial results, including non-GAAP results that exclude stock-based compensation expense, write-off and recovery, amortization of purchased intangible assets, goodwill impairment, legal settlement, foreign exchange gains and losses, and acquisition-related costs. Because EPAM's reported non-GAAP financial measures are not calculated according to GAAP, these measures are not comparable to GAAP and may not be comparable to similarly described non-GAAP measures reported by other companies within EPAM's industry. Consequently, EPAM's non-GAAP financial measures should not be evaluated in isolation or supplant comparable GAAP measures, but, rather, should be considered together with the information in EPAM's consolidated financial statements, which are prepared according to GAAP.

Forward-Looking Statements

This press release includes statements which may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions and the factors discussed in our most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. EPAM undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.